Southeast Asia’s Green Economy Hits US$290 Billion according to Bain, StanChart Report

AI, EVs and Infrastructure Race Reshape Investment Flows

SINGAPORE, May 18, 2026 – Southeast Asia’s green economy has grown into a US$290 billion market and is projected to reach US$430 billion by 2030, but investors and policymakers are increasingly confronting a major execution challenge as infrastructure bottlenecks, power constraints and uneven policy alignment slow deployment across the region.

According to the latest Southeast Asia Green Economy Report 2026: The New Calculus by Bain & Company and Standard Chartered, more than 35 per cent of announced green capex across Southeast Asia’s power and electric vehicle ecosystems is failing to convert into actual deployment.

The report estimates that of approximately US$540 billion in announced green capex expected across the region’s power and EV value chains by 2030, only about US$315 billion is currently on a credible path toward implementation.

Researchers argue this signals a broader shift in how capital is being allocated within Asia’s green transition. “The transition is sorting leaders and laggards in ways that climate ambition alone can no longer bridge,” said Dale Hardcastle, Partner at Bain & Company.

“Capital is flowing where commercial demand, energy security and policy that delivers infrastructure come together, and stalling where any of the three is missing,” he said.

AI and Data Centres Become New Drivers of Green Infrastructure Investment

One of the strongest investment themes emerging from the report is the growing influence of AI infrastructure, hyperscale data centres and industrial electrification on Southeast Asia’s energy and infrastructure landscape.

The report projects that the region could absorb more than 100 terawatt-hours of additional electricity demand over the next three to four years from data centres, EVs and green industrial clusters alone, representing over US$200 billion in committed capex.

As global AI expansion accelerates, Southeast Asia is increasingly positioning itself as a major destination for data centre investment due to its strategic location, digital growth and relatively competitive operating costs.

However, inadequate grid infrastructure is rapidly emerging as a major business risk. According to the report, 90 per cent of regional data centre operators and hyperscalers surveyed identified grid connection delays as a key operational constraint, with many indicating willingness to pay premiums for guaranteed access timelines.

The report warns that continued delays could push operators toward interim fossil-fuel power solutions, potentially undermining long-term decarbonisation goals while increasing operational costs and regulatory risks.

EV Momentum Surges Across Southeast Asia

Electric vehicle adoption remains one of the strongest-performing sectors within Southeast Asia’s green economy.

The report notes that EV adoption across the region has exceeded earlier projections by 1.5 to 2 times, with four Southeast Asian markets now ranking among the world’s top 15 EV markets by new vehicle sales.

Singapore emerged as one of the region’s strongest-performing EV markets, with EVs accounting for approximately 46 per cent of new four-wheel vehicle sales in 2025, up from around 34 per cent in 2024.

Despite rising demand, Southeast Asia still captures less than 2 per cent of global EV and battery production value, raising concerns that the region could become a high-volume assembly and consumption market without securing higher-margin manufacturing and supply-chain ownership opportunities.

The report suggests that supplier and platform decisions made between 2026 and 2028 will likely determine how much long-term industrial value Southeast Asia ultimately captures from the EV transition.

Singapore Strengthens Climate Frameworks While Corporate Roadmaps Diverge

The report’s SEA Green Economy Index 2026 indicates that national climate ambitions across Southeast Asia remain relatively stable, although corporate execution and investment deployment are becoming increasingly uneven.

Singapore recorded progress across several areas, including mandatory emissions reporting, sustainable aviation fuel initiatives and corporate transition roadmaps.

The report also highlighted Singapore’s progress around carbon taxation and Article 6 carbon market access agreements, although renewable energy still accounts for only around 5 per cent of total power generation due to the country’s structural land and resource constraints.

Recommendations for Singapore include accelerating implementation of carbon tax increases, strengthening the Indonesia-Singapore renewable energy corridor and mandating wider adoption of the Singapore-Asia Taxonomy among SGX-listed companies.

Across the wider region, Thailand advanced its net-zero target timeline to 2050 under its updated NDC 3.0 framework, while Malaysia strengthened implementation of its national energy transition roadmap through LT-LEDS and CRESS-related initiatives.

However, investment execution remains a major challenge. The report found that 50 to 60 per cent of renewable energy projects across Vietnam, Thailand and Indonesia were cancelled between 2021 and 2025 due to issues including permitting uncertainty, unclear power purchase agreements and inadequate grid connectivity. Nickel and battery investment projects experienced cancellation rates of 40 to 50 per cent.

Chow Wan Thonh, Head of Coverage for Singapore and ASEAN at Standard Chartered, said Southeast Asia’s ability to align policy, infrastructure and financing will determine whether the region can fully capture its green growth opportunity.

“The opportunity for Southeast Asia’s green economy is substantial, but capturing it requires synchronising policy, infrastructure and finance at speed,” he said.